32880 Ocean Reach, Lewes, De 19958 | $439,900

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SPACIOUS AND LUXURIOUS! 4BR, 4 full BA brick front home on great lot. Enjoy the privacy of a wooded back yard from screened-in back porch; 3 first-floor bedrooms and 2 baths; hardwood floors in living room, dining room and halls; large living room wi

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Lewes Mortgage Interest Rates Reflect Fed Funds News

The way the media treated last week’s federal funds rate announcement by the Federal Reserve Board was a convincing demonstration of how much importance is placed on that singular piece of the financial puzzle. That rate may not be directly tied to Lewes mortgage interest rates, but since it determines lenders’ borrowing costs, its effect is considerable.

For many years now, Lewesmortgage interest rates have been comfortably nestled near the bottom of their historical range. Many Lewes homeowners have enjoyed the resulting low monthly payments on their mortgages. Lewes home sellers have likewise benefitted from home loan interest rates that make their properties more affordable than would otherwise be the case.

Real estate repercussions are a major part of the reason that the Fed’s announcement, which came midday last Thursday, had the national media holding its collective electronic breath. With ten minutes to go, one cable network talking head could add little illumination. “Wall Street will be watching the announcement very closely,” was her understatement. Channel flipping with five minutes to go, viewers found the streaming banner at the bottom of one network trumpeting BREAKING NEWS…BREAKING NEWS… before the fact. On CNBC, “the most highly anticipated announcement in years” was awaited by four commentators who had the unhappy challenge of predicting the decision mere seconds before the fact. Above the ever-moving streams of real-time data (oil was down, the stock markets up) panelists chattered about China (“it’s big and mysterious”), inflation targets (“missed again”), and optimism (“a rate hike won’t hurt the economy, it will help”). Only if the Fed “saw something down the road,” it was agreed, would they not raise rates. Then, just 5 seconds to go…then-

The Fed left rates unchanged.

Citing concerns over global this and financial that, the Fed said they were going to be monitoring them. The economy expanded at a moderate pace, and housing improved moderately, they said. But since global conditions might cause trouble...

The media’s excitement level flat-lined within minutes. “The markets are not panicking,” said a gentleman in a snappy suit. He looked irritated. “I blew it,” said another, who moments before had thrown in with the majority predicting a rate rise. “They cited uncertainty,” he frowned; then blurted, “The Fed is the biggest source of uncertainty!”

The stock markets didn’t react at all at first. Later, they closed mixed.

The next day, mortgage interest rates crept downward.

What seemed to be an excitement bust for the media was good news for many of the viewers. When the Fed funds rate continually hovers close to zero, there’s ample reason to suspect that Lewes mortgage interest rates might stay put for a while. TheStreet website later reported that they expected rates to rise a bit before year’s end. Given the recent record of expert predictions, it might be safer to stand behind one with a better chance of success: the next Fed announcement, I predict, will be the most anticipated announcement in years.

Meantime, if you have been mulling over whether to take advantage of the current balmy mortgage interest environment, I hope you’ll give me a Call/Text me Russell Stucki at (302) 228-7871, email me at russellstucki@remax.net, visit more listings at www.beachrealestatemarket.com.

Delaware Home Loan Rate-Watchers Eye New Fed Leadership

On January 6, the Senate confirmed Janet Yellen to head the Federal Reserve’s Board of Governors, making it the first time ever that a woman has led the nation’s most important financial institution. In some respects, it makes her the most powerful woman in the United States.

As with every personnel change in the Fed, Yellen’s rise has fostered plenty of concerns about the direction the Federal Reserve will take under her leadership. Since it’s the institution that determines the federal funds rate—which in turn dictates how much businesses and individuals pay for their loans—any change in Federal Reserve policy has a significant impact on our local home loan rates. Sooner or later, those rates affect just about all of us.

So, what clues do we have about the direction Ms. Yellen is likely to lean? One came just before the financial crisis. Before the financial meltdown, Yellen expressed concerned. In 2005 she is quoted as saying, “Analyses do indicate that house prices are abnormally high, that there is a “bubble" element, even accounting for factors that would support high house prices."

Last year was an excellent one for Delaware real estate, yet according to the Standard & Poor’s Case-Shiller Index, national housing prices are still 20% off the peaks set in 2006. Research from real estate website Trulia shows that U.S. housing is still 4% undervalued (compared with a 39% overvaluation reached at the 2006 peak). Happily, Yellen, an early identifier of the previous housing bubble, has not expressed similar concerns about today’s real estate market.

In 2012, the Federal Reserve’s previous leadership announced an unemployment threshold of 6.5% as the point at which it would consider raising interest rates. During Yellen’s first testimony as Chairman, she stated that the Federal open market committee would likely keep interest rates near zero well past that mark. In Yellen’s view, the “recovery in the labor market is far from complete.” As evidence, Yellen pointed to 7.1 million people who are mired in part time work but who would prefer full time jobs—and to the 3.6 million people who have been unemployed longer than six months.

For Delaware home loan rate watchers concerned that a rise in rates might dent real estate values, the new Chairman has sounded some reassuring notes. In her recent address to the Committee on Financial Services, Yellen explicitly stated that she expects “a great deal of continuity in the FOMC’s approach to monetary policy.” That could mean that interest rates for local home loans might gradually rise, it’s not likely to be precipitous.

The bottom line: dramatic rises in interest rates are unlikely under Yellen’s watch, but those considering getting a home loan who have not yet taken advantage of still low interest rates might do well to consider doing so.

Based on information from Sussex County Association of REALTORS®, Inc. which neither guarantees nor is in any way responsible for its accuracy. All data is provided 'AS IS' and with all faults. Data maintained by Sussex County Association of REALTORS®, Inc. may not reflect all real estate activity in the market. Remax is a real estate licensee in the State of Delaware. SCAOR08108